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How to become a successful music streaming platform in Japan


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How to become a successful music streaming platform in Japan

  1. 1. How to become a successful music streaming platform in Japan — Leanings from Chaku-uta —Monday, April 1, 13
  2. 2. The integration of a communication function within a streaming music platform is a key driver for its success in Japan. • chaku-uta, a benchmark in digital music distribution service in Japan, has successfully integrated a communication function to its platform • “communication functions” are not limited to “integration with multiple SNS”, but also refer to “functions that drive internal and external conversation within and beyond the platform”Monday, April 1, 13
  3. 3. In essence, chaku-uta is a ringtone with the ability to play real music. (“chaku” means to receive, “uta” means a song) Supplementarily, it serves as a conversation driving tool, like a jukebox or other social smartphone apps. ©123RF ©123RF “Dowango Group [one of the biggest web entertainment providers] initially started as a digital music distribution service, but we did not just see ourselves as an online music seller. We considered chaku-uta as a service that initiates conversations between the purchaser and the listener. We believed that people would adapt to and depend on this type of service”   - Seiji Sugimoto, Executive of Dowango Subsidiary Niwango [Source: Bessatsu Kadokawa “souryoku tokushu nikoniko douga” ]Monday, April 1, 13
  4. 4. After its introduction in 2004, chaku-uta reached its peak in 2008 and started seeing its decline from 2010 onward. Life Cycle of Chaku-uta Growth Stage Maturity Stage Decline Stage 500M 100,000M 375M 75,000M Quantity (Download) Price (JPY) 250M 50,000M 125M 25,000M Quan%ty Price 0M 0M 2005 2006 2007 2008 2009 2010 2011 2012 [Source: RIAJ ]Monday, April 1, 13
  5. 5. From 2011 to 2012, the number of chaku-uta download* dropped by 41% while the single downloads on smartphones increased by 27%. Yet, overall single downloads decreased by 16%. 70% 200M 43M Smartphone Shipment Ratio (vs. Feature Phone) 38M 45M 58% 55M 150M -16% 142M 143M Quantity (Download) 138M 70M +27% 109M 100M 22% Singles purchased on Smartphones Singles purchased on Feature Phones 65M 50M -41% 8% 3% 0M 2008 2009 2010 2011 2012 [Source: RIAJ ] [Source: MM Souken] *Note: Singles purchased on feature phones are counted as chaku-uta. Singles purchased on smartphones are NOT considered as chaku-uta.Monday, April 1, 13
  6. 6. Why has the overall number of downloads shrunk? The rapid penetration of smartphones replaced chaku-uta’s tools with smartphone applications, consequently declining overall usage of chaku-uta. after smartphone penetration (2011-2012) the substitutes for chaku-uta impact of the substitutional apps before smartphone penetration ✓Lower frequency usage of •iTunes (2008-2010) •Spotify Chaku-uta g ✓Higher frequency usage of e nin •Soundcloud etc. list substitutional apps F 3R c usi 12 © m music downloading ✓Decrease of single downloads •iTunes Music Store through chaku-uta © 12 3R F •Play Store ✓Growth of single downloads co •Amazon etc. through apps nv F er 3R 12 sa © ti o chaku-uta as a toolbox for nd - music listening riv ing - music downloading ?? •YouTube (Generates Conv.) ✓Declined usage of chaku-uta as a - conversation driving •Facebook (Social Conv.) conversation driver •Line etc. (Personal Conv.) RF 23 ©1 decay of chaku-utaMonday, April 1, 13
  7. 7. Online music platforms need to embrace the conversation driver function in addition to the music functions for success in Japan; otherwise may follow the same path as chaku-uta. ©123RF ©123RF • Implementing the following measures is vital for success 1) highly functional on smartphones (for the rapid spread of smartphones) 2) offering free and conversation generating service (against YouTube, etc.) 3) incorporating social communication tool (against Facebook, etc.) 4) integrating personal communication tool (against Line, etc.)Monday, April 1, 13
  8. 8. Coca-Cola Japan’s “Share a Coke and a Song” Campaign has successfully implemented the four measures. “I know “Remember this song this song from our from 1996 he highschool prom?” just posted.... maybe I should comment on ©123RF it” ©123RF enter password listen to the hit buy a campaign tap a share on the label on songs of the year Coke with a year button to share on the campaign with or without number SNS website frineds ©123RF [Source: the Coca-Cola (Japan) Company] • highlight of this campaign: - requires no purchase for songs (1 Bottle of Coke= ¥150) - provides seamless listening experience on a smartphone - the hit songs from the past give listeners a sense of nostalgia, which sparks conversation - the platform incorporates a tool to physically and digitally share the personal listening experienceMonday, April 1, 13
  9. 9. Thank you.Monday, April 1, 13